Correlation Between BMO Dividend and RBC Quant
Can any of the company-specific risk be diversified away by investing in both BMO Dividend and RBC Quant at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BMO Dividend and RBC Quant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Dividend ETF and RBC Quant European, you can compare the effects of market volatilities on BMO Dividend and RBC Quant and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BMO Dividend with a short position of RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Dividend and RBC Quant.
Diversification Opportunities for BMO Dividend and RBC Quant
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BMO and RBC is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BMO Dividend ETF and RBC Quant European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant European and BMO Dividend is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BMO Dividend ETF are associated (or correlated) with RBC Quant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Quant European has no effect on the direction of BMO Dividend i.e., BMO Dividend and RBC Quant go up and down completely randomly.
Pair Corralation between BMO Dividend and RBC Quant
Assuming the 90 days trading horizon BMO Dividend ETF is expected to generate 0.85 times more return on investment than RBC Quant. However, BMO Dividend ETF is 1.18 times less risky than RBC Quant. It trades about 0.24 of its potential returns per unit of risk. RBC Quant European is currently generating about -0.16 per unit of risk. If you would invest 4,550 in BMO Dividend ETF on August 29, 2024 and sell it today you would earn a total of 196.00 from holding BMO Dividend ETF or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Dividend ETF vs. RBC Quant European
Performance |
| Timeline |
| BMO Dividend ETF |
| RBC Quant European |
BMO Dividend and RBC Quant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Dividend and RBC Quant
The main advantage of trading using opposite BMO Dividend and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Dividend position performs unexpectedly, RBC Quant can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in RBC Quant will offset losses from the drop in RBC Quant's long position.| BMO Dividend vs. BMO Europe High | BMO Dividend vs. BMO Covered Call | BMO Dividend vs. BMO Covered Call | BMO Dividend vs. BMO Europe High |
| RBC Quant vs. RBC Quant EAFE | RBC Quant vs. RBC Quant Dividend | RBC Quant vs. RBC Quant Emerging | RBC Quant vs. RBC Quant Canadian |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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